Electronic discovery: 2006 amendments to the Federal Rules of Civil Procedure.

I. INTRODUCTION

On December 1, 2006, the "E-discovery Amendments" (Amendments) to the Federal Rules of Civil Procedure (FRCP) went into effect. (1) The Amendments were approved to address a myriad of issues associated with electronic discovery (e-discovery) by attempting to (1) define discoverable electronic information, (2) control the costs associated with the discovery and production of electronic information, and (3) protect privileged or otherwise protected information. However, a year after the Amendments went into effect, lawyers are still puzzled by the intricacies of e-discovery, and the cost of production is still rising. The Amendments have instead created confusion and, to some extent, created fears reminiscent of "Y2K" (2) which is in part responsible for the rise in e-discovery costs.

This note will look at the reasons why the Amendments fall short of creating uniform and efficient standards governing e-discovery and will suggest practical solutions lawyers can implement to make navigating e-discovery easier. Section II will focus on the impact e-discovery has had on the litigation process and the courts' attempt to deal with issues related to electronic information, leading to the Amendments' approval. Section III will examine the Amendments. Section IV will discuss ways practitioners can prepare themselves for e-discovery through practical solutions.

II. IMPACT OF DIGITAL INFORMATION ON THE DISCOVERY PROCESS

In the past, the majority of business records, communications and other documents created by a company during the course of business were in paper format. (3) When litigation occurred, attorneys simply looked through the paper documents to find relevant documents. Today, the proliferation of computers in the corporate workplace and the dependency of email as a tool of communication and transactions have led to an explosion of electronic information being generated, stored, sent and received during the course of a normal work day. (4) Information and data traditionally created and stored in paper format is now routinely created and stored in electronic format. (5) Additionally, the decreasing prices in data storage systems (6) have led to companies storing vast amounts of electronic data on their live networks, desktop and laptop computers, and archives. The distinct characteristics of electronic data (a product of the way it is created, stored, transmitted and disposed of) have created discovery problems not seen during the course of a paper discovery.

A. Volume

The most significant characteristic is the sheer volume of potentially discoverable electronic information. In the past, the lack of technology limited the amount of paper documents produced. Today, computers make it relatively easy to create an electronic document. As a result, the majority of a corporation's work product and communications are created and stored in electronic format. (7) For example, a company of 100,000 employees may store an average of 1.5 billion emails annually. (8)

Unlike the static nature of paper, electronic documents are dynamic and computer programs can create new data and multiple copies during routine computer operations (9) without a user's knowledge. While a paper document can physically be moved from one filing cabinet to another without creating a copy, moving an electronic document from one location to another creates multiple copies and new documents. For example, sending a document via email requires that: (1) the sender's computer make a copy of the document which will reside on the email program's directory, (2) the email and document "pass" through a corporate network or internet service provider (ISP), creating a copy on the network, and (3) the recipient's computer make a local copy of the email and document for viewing. (10) A minimum of three additional copies are made in the course of an email transmission. Moreover, as a user works on an electronic document, multiple copies and revisions of the document are automatically saved in temporary folders to prevent the lost of data. (11) Users are usually unaware that additional copies are being saved as the temporary folders are usually buried deep within an operating system's directories.

Electronic documents also contain additional information that is not provided by paper documents. When a digital document is created, modified, or transmitted, new data associated with the document is also created. (12) This new data, called metadata, is stored in the associated electronic document and is typically hidden. (13) However, extracting metadata will create a new electronic document of its own. (14)

Digital documents are not disposed of in the same manner as paper documents. While a paper document can be torn up and thrown away, deleting digital information does not really dispose of the document. Pressing the "delete" key on a keyboard only allocates the space taken up by the file for later use by other data; it does not erase the contents. (15) "The actual file stored on the disk is left untouched.... [T]hose files then might be overwritten by new files or by additions to old files, but unless and until that happens the data that makes up the file, itself, remains untouched." (16) Therefore, paper documents that no longer serve a business purpose can be discarded while their electronic equivalents remain intact and may be retrieved during data inspection.

B. Accessibility

Arguably, the second most important characteristic of electronic data that produces discovery problems is its accessibility--the ability to retrieve and produce electronic data in a readable format without undue burden or expense. "Paper records, while often voluminous, could be reviewed without any intermediate and costly steps. But [electronic data] may be stored on outdated systems, or in an inaccessible and disorganized format, such that no review ... can be done, absent the significant expense of restoring data to a useable format." (17)

What was considered accessible or inaccessible electronic data under the pre-Amendment FRCP was unclear. Prior to the Amendments, changes to the FRCP relevant to e-discovery where last done in 1970. In that year, FRCP Rule 34 was amended to include "data compilations" to the list of documents a party was required to produce upon request. (18) Although pre-Amendment Rule 26 protected parties from producing documents that were unduly burdensome or unnecessary, it did not provide guidance to determine inaccessibility, nor did it address formats in which data compilations should be produced. (19) Federal courts were left to interpret the issue of accessibility of electronic data.

The problem of accessibility due to sheer volume of electronic data can be illustrated by the often cited case of Coleman (Parent) Holdings, Inc. v. Morgan Stanley (20). As a business practice, Morgan Stanley routinely backed up its network data on tapes and stored them in various locations. (21) At the discovery phase, Morgan Stanley repeatedly struggled to locate, review and produce backup tapes as ordered by the trial court. Morgan Stanley failed to discover 2,330 backup tapes because the tapes numbered in the thousands and were located in warehouses across the country. (22) The plaintiff was awarded over $1 billion in damages. (23)

Accessibility also includes the ability to review electronic data and the ability to produce it in a readable format. Often times the data stored on backup tapes is in a format that that is not in a reasonably useful format. In Morgan Stanley, even if the backup and disaster recovery tapes were located, it would have taken a considerable amount of time and effort to retrieve, review, and produce the data. The data residing on the tapes were in an outdated proprietary format, and were not stored in an organized way that would have made search methods useful. (24) Production of these tapes would have "cost[ed] at least hundreds of thousands of dollars and require several months to complete." (25)

C. Cost-Shifting

In the early days of e-discovery, the cost of producing electronic data was borne by the responding party, supported by the idea that it was the cost of doing business. (26) The cost of searching thorough and sorting electronic data may have been inexpensive at times. (27) But the cost of producing electronic data is usually high due to the voluminous nature of electronic data and the fact that some data may be inaccessible, requiring time to retrieve and expense to convert into a useable format. (28)

The issue of who should pay the cost of production has led to many disputes, and many times courts have taken inconsistent approaches to resolving the issue. In what may be the first case addressing e-discovery cost-shifting, Adams v. Dan Rivers Mills, Inc. (29), the plaintiffs requested computer payroll information explaining that they needed the information to determine if the defendant acted discriminatorily. (30) Defendants objected, arguing they had already produced the information via computer printouts. (31) The court, however, held that the FRCP did not preclude the production of electronic versions of previously produced information, but shifted the cost of production to the plaintiffs. (32) While the court in Dan Rivers did not provide a reason for shifting the costs, other courts have based their decision on the fact that a responding party would need to create the electronic data as opposed to making copies of existing data. (33) In cases where a party needed to create the data the requesting party would be responsible for production costs. (34)

In an attempt to address the cost shifting issue, federal courts began to consider the burden a party has in producing electronic data. In Hines v. Widnall, (35) the defendant made electronic copies of employment records relevant to a claim of discrimination for its own use at a cost of approximately $250,000. (36) The plaintiffs requested the electronic version of the employment records, even thought they had already received paper versions. (37) The court rejected the defendant's objections because the defendant chose to create the electronic versions and it had "virtually unlimited assets," compared to the plaintiffs. (38) The court ordered the production of the electronic version, at defendant's cost, citing no undue burden on the defendant. (39)

In Rowe Entm't v. William Morris Agency, Inc., (40) a racial discrimination case, defendants objected to plaintiff's request to restore backup tapes, explaining that the cost of restoring the tapes to an accessible format and the legal cost of reviewing the data for privileged information was prohibitive. (41) The defendant estimated that the total cost of cataloging, restoring and processing all backup tapes would reach $9,750,000. (42) The court found that the information sought was potentially relevant but rejected previous federal court reasoning that "the defendants' 'choice' to use electronic storage dictated that the defendants should bear the burden of electronic discovery." (43) Instead, Rowe considered an eight factor balancing test that included:

   the specificity of the discovery request;

   the likelihood of discovering critical information;

   the availability of such information from other sources;

   the purpose for which the responding party maintains the
   requested information;

   the relevant benefits to the parties of obtaining the information;

   the total cost associated with the production;

   the relative ability of each party to control the costs and its
   incentive to do so; and

   the resources available to each party. (44)

Considering the factors above, the court ordered the plaintiff to pay only for the costs associated with the restoration of backup tapes. (45) Noting that the Rowe factors generally favor shitting the cost of production to the requesting party, the same court reworked the cost-shifting analysis in the following year. (46)

In Zubulake I, a sex discrimination case, the defendant objected to the production of emails explaining it would cost $175,000 to produce, not including the time it would take to review for privilege. (47) In conducting the cost-shifting analysis, the court rejected the Rowe factors and created a new seven-factor test. (48) The Zubulake I court explained that (1) the Rowe eight-factor test was incomplete and redundant, (2) certain Rowe factors should predominate as opposed to being applied equally, and (3) that courts following Rowe did not always have a full record to support its conclusion. (49)

To address these concerns, Zubulake I proposed a three-part analysis. First, a court would have to determine whether the data sought is accessible, and cost-shifting can only be considered where the data is deemed inaccessible. (50) Second, if cost shifting is warranted, a court should require the responding party to restore and produce a sample from the inaccessible data to determine whether relevant data may be found. (51) Third, a court should consider whether producing the requested data would place an undue burden or expense on the responding party. (52) In order to do so Zubulake I formulated a new seven-factor test to replace the Rowe factors. (53) The factors include:

   The extent to which the request is tailored to discover relevant
   data;

   the availability of those data from other sources;

   the total cost of production, relative to the amount in
   controversy;

   the total cost of production, relative to the resources available
   to each party;

   the relative ability and incentive for each party to control its
   own costs;

   the importance of the issue at stake; and

   the relative benefits to the parties in obtaining those data. (54)

Although the Zubulake I factors are perhaps the most followed set, some federal courts are in disagreement and have adopted their own set of factors as cases appeared before them. (55)

D. Privilege

Maintaining privilege when producing electronic data can be considerably more difficult and costly than when producing paper documents. (56) The high cost of privilege screening is a byproduct of the volume of electronic data and also of the nature of that data, particularly email. (57) While other costs can be mitigated by the use of technology, the privilege screening process still requires attorney time to manually read and make privilege decisions. (58)

Contributing to the cost of the privilege review process is the fact that in many jurisdictions, inadvertent production of privileged data constitutes a waiver of privilege. For example, in Marrero-Hernandez v. Esso Standard Oil Co., (59) the defendant tried to claim privilege attached to electronic data produced a year earlier (60). The defendant learned of the inadvertently produced data after privileged documents were attached to the plaintiffs counterclaim. (61) The defendant explained that as result of an "errant mouse click" files containing privileged information merged with documents what were not privileged, leading to the production of "approximately 1500 potentially privileged documents." (62) The court responded by stating: "[i]f the parties opt to use technological resources to store privileged information, they should also provide the necessary protection for precisely that information." (63) There have been other cases with facts similar to Marrerro, but with differing positions on the waiver of privileged communications. (64) In addition to potential waiver within a matter, inadvertent production of privileged data in one matter could also serve as waiver in another other matter. (65) Therefore, law firms are often times caught in a predicament where they must spend enormous time and money to make certain that potentially privileged or protected information is not produced inadvertently.

E. Preservation & Spoliation 

Perhaps the most uncertain and problematic aspect of e-discovery is the duty to preserve electronic data. A party's duty to preserve potentially relevant data arises when litigation is reasonably anticipated. (66) Due to the large volumes of electronic data and continuing changes in information technology, there is a potential for failing to identify, preserve or produce relevant data even after a party is aware of the duty to preserve.

The failure to preserve data raises the issue of spoliation of evidence. Electronic data can be spoiled or destroyed by willful deletion, negligence or a user's unfamiliarity with computer technology. Furthermore, "it can be very difficult to interrupt or suspend the routine operation of computer systems to isolate and preserve discrete parts of the information they overwrite, delete or update, on an ongoing basis, without creating problems...." (67) Sanctions for spoliation of ESI vary from the imposition of fines, shifting the cost of production, and awarding attorney's fees, to instructions of adverse inference, excluding evidence, and even dismissing claims. (68)

In Morgan Stanley, many potentially relevant e-mails were lost because Morgan Stanley continued its policy of deleting e-mails after a duty to preserve data had attached. (69) As a result, the court sanctioned Morgan Stanley by giving an adverse inference instruction for spoliation of evidence. (70) The jury awarded the plaintiff approximately $1 billion based on the adverse inference without reaching the merits of the case or finding that the lost emails were relevant. (71) Ironically, the 1722 case of Armory v. Delamirie (72) illustrates the problem with the Morgan Stanley decision. In Delamirie, a chimney sweep found what he though to be a gemstone and took it to a jeweler for appraisal. (73) The jeweler never returned the gemstone and the chimney sweep sued the jeweler for return of the gemstone. (74) Upon failure to produce the stone in court, the judge instructed the jury to "presume the strongest against [the jeweler], and make the value of the best jewels the measure of their damages." (75)

Like Delamirie, the court in Morgan Stanley had no basis to conclude that the lost emails would have been the "smoking gun" proving fraud or have any value to plaintiff' s claims. The nature of electronic data and information systems can not guarantee that all possibly relevant data can be preserved, even under a party's best efforts. Sometimes there is no way to ascertain the nature or volume of destroyed data.

Federal courts attempted to create a standard to determine when sanctions, and in particular adverse inferences, should apply. The most popular test requires that the spoliator (1) have a duty to preserve, (2) have a culpable state of mind, and (3) that the destroyed evidence was relevant to the opponent's claims or defenses. (76) However, discrepancies among the federal courts with regard to the level of culpability and the content of the destroyed data remained. The Eighth and Tenth Circuits, for example, require intentional misconduct or bad faith to impose adverse inference sanction (77), where the Second Circuit has held that neither bad faith nor intentional misconduct is required. (78)

III. THE 2006 AMENDMENTS

As a result of the e-discovery issues faced by federal courts, the Advisory Committee on the Federal Rules of Civil Procedure (Advisory Committee) proposed amendments to the FRCP. (79) Recognizing that the then-current FRCP did not adequately address the discovery problems posed by electronic data, and that local rules enacted to fill the gap created a patchwork of rules, the Supreme Court approved the Amendments on April 12, 2006. (80) The hope was that the Amendments would "provide effective support and guidance for managing discovery practice as it changes with technology." (81) Particularly, the Advisory Committee's goal was that the Amendments would "reduce the cost of discovery, [] increase its efficiency, [] increase uniformity of practice, and [] encourage the judiciary to participate more actively in case management...." (82) The Amendments address this by (1) expanding the definition of discoverable materials, (2) requiring parties to focus on potential e-discovery issues early on, (3) providing guidelines on the accessibility of electronic data, (4) addressing privilege issues, and (5) limiting sanctions for the loss of electronic data. (83)

A. Defining ESI

The term "electronically stored information" (ESI) is introduced in Rule 26. (84) The Advisory Committee notes warn against assigning a precise definition but states that ESI includes information that is stored electronically and "is intended to be broad enough to cover all current types of computer based information, and flexible enough to encompass future changes and development." (85) In theory, defining ESI broadly allows the FRCP to adjust to new technologies, but in practice, the broad definition has allowed e-discovery to expand into areas not otherwise thought to be discoverable before or after the Amendments.

In Columbia Pictures Indus. v. Bunnell (86), a suit for copyright infringement, the court ruled that data stored on random access memory (RAM) (87) constitutes ESI. The district court held that RAM is "'stored' information under the plain meaning of the unambiguous language of Rule 34." (88) This holding expands the definition of ESI to include data not supported by the Amendments, including data is that burdensome and costly to preserve.

Rule 34 allows a party to request any designated documents or electronically stored information--including writings, drawings, graphs, charts, photographs, sound recordings, images, and other data or data compilations--stored in any medium from which information can be obtained either directly or, if necessary, after translation by the responding party into a reasonably usable form. (89)

Although the Advisory Committee states that Rule 34 covers current storage technologies as well as those of the future, the plain meaning of this rule does not support the district court's holding. A reasonable reading of Rule 34 leads one to the conclusion that the discoverable electronic data contemplated by the Advisory Committee is data that is stored for a prolonged period of time; something more than just temporary in time. The illustrative examples of ESI included in Rule 34 all have the common factor that each is stored semi-permanently. Each can be stored on a computer's hard drive or other digital medium until a user manually deletes the information, or is damaged or deleted by a computer process. In contrast, RAM is inherently transient. RAM is not used to store or record data, rather it is a working area where data is manipulated during a computing process. Data processed in RAM is constantly overwritten, usually in less than a second. (90)

Rule 34 certainly formalizes and expands the types of ESI that is discoverable. However, in its attempt to be flexible enough to include future technologies, Rule 34 defines ESI too broadly. As shown by Columbia Pictures, the broad definition of ESI allows other forms of electronic data to be discovered, even when it was not intended to be.

B. Early Attention to e-Discovery Issues

Perhaps the Amendment's best effort to address e-discovery issues is requiring parties to resolve potential problems early in the discovery phase. Changes to Rule 26 include the addition of ESI to the topics that must be addressed by the parties during the meet-and-confer discovery planning phase. (91) Rule 26 requires parties to meet within thirty days after a complaint is filed to discuss issues relating to the preservation of relevant ESI, the format in which ESI should be produced and potential claims of privilege with regards to ESI. (92) Once parties have agreed on a discovery plan, or have attempted to without success, a report of the meet-and-confer conference should be delivered to the court for approval or modification. In the event that parties do not reach an agreement, the court is asked to take a more active role and impose a discovery plan it deems proper. (93)

In order to address one of the most litigated e-discovery issues, Rule 34 recommends that the requesting party to choose a format in which ESI should be produced. (94) If the requesting party does not request a specific format, the rule requires production in one of two formats. The "responding party must produce [ESI] in a [format] in which it is ordinarily maintained or in a [format] that [is] reasonably useable." (95)

C. What is Accessible?

Rule 26(b)(2) attempts to make a distinction between what is accessible and inaccessible ESI by establishing a protocol for how ESI should be produced. A responding party is not required to produce ESI that it designates inaccessible due to undue burden or cost (96), but a requesting party may move the court to compel production of the ESI deemed inaccessible (97). At that point, the responding party must affirmatively show that production of the requested ESI will be unduly burdensome due to volume, time or cost. (98) Even after the responding party shows undue burden, the court may still order discovery upon a showing of good cause by the requesting party. (99) However, good cause compulsion is limited to where (a) discovery may be "unreasonably cumulative or duplicative, or obtainable" from a less burdensome source (100), (b) the requesting party has had enough time to get the information via discovery (101), or (c) the burden of discovery outweighs "the amount in controversy, parties' resources, the importance of issue at stake and ... the importance of the proposed discovery in resolving the issues (102)."

D. "Claw-Back" of Privileged Information

To address the issue of inadvertent disclosure of privileged data, changes to Rule 26 set up a mechanism for "clawing-back" such data. Rule 26(b)(5) gives the producing party an opportunity to notify the requesting party that privileged data has been inadvertently produced and to request that the data not be used. (103) After notification, "a party must promptly return, sequester, or destroy the specified information and any copies it has...." (104) The requesting party then has the option to move the court for a hearing on privilege or attorney work product. (105)

Although the amendment to Rule 37 is a good step forward, it still does not address the all-important question of whether inadvertently producing privileged data constitutes a waiver of that privilege or protection. However, proposed amendments to the Federal Rules of Evidence (FRE) may provide guidance on the issue. Finding that the current law on waiver of privilege and work product was in part responsible for the rising costs of discovery, the Supreme Court's Judicial Committee Conference proposed FRE 502. (106) Proposed FRE 502 does not deal comprehensibly with attorney-client privilege or attorney work product. Rather, it deals primarily with issues involved in the disclosure of protected information in federal court or to federal agencies. (107) As proposed, FRE 502 would limit the scope of waiver to only the information disclosed. (108) It would also protect against inadvertent disclosure when made at the federal level, if the holder took reasonable steps to prevent such disclosure and employed reasonable prompt measure to retrieve the information. (109)

E. "Safe Harbor" From Sanctions

Perhaps the single Amendment most important to lawyers and their clients is found in Rule 37, which now gives parties a "safe harbor" from spoliation sanctions when a party fails to preserve potentially relevant data. (110) The rule states: "[a]bsent exceptional circumstances, a court may not impose sanctions under these rules on a party for failing to provide [ESI] lost as a result of the routine, good faith operation of an electronic information system." (111)

The Advisory Committee notes to Rule 37 recognize that the suspension or interruption of information systems can be unduly burdensome or expensive. (112) However, a party is still required to preserve data in anticipation of litigation. (113) A party would not be able to exploit their information system's retention policy to avoid sanctions. To benefit from the safe harbor rule, a party will have to show that the spoliation of ESI was in good faith and not the result of intentional or negligent destruction. (114)

IV. HOW TO PREPARE FOR E-DISCOVERY

Despite the Amendments, there still remains uncertainty with regards to e-discovery. Therefore, attorneys are well advised to become familiar with the Amendments and the rapidly evolving case law. The following are practical guidelines to help attorneys navigate through the maze that is e-discovery.

A. Pre-discovery Plan

Attorneys need to prepare for e-discovery even before a complaint is filed or the duty to preserve arises. Attorneys must become familiar with their clients information systems and take an active role in forming a document retention policy. (115)

Learning the layout of the corporate network and knowing the people responsible for managing the systems will facilitate implementing a litigation hold as quickly as possible and with minimal interruption to business operations. An attorney should inquire about the size, location and types of ESI that a client deals with during the normal course of business. Additionally, attorneys should collect information regarding operating systems and applications, file-naming and saving conventions, archiving and backup schedules, and the identity of all personnel with access to corporate networks. Of particular interest should be the email retention policies, protocol for terminating employees, what and how are former employees' data preserved or deleted, how customer data is preserved, and the time it takes stop and copy data from a live network.

With the Amendments and clients' information in hand, an attorney should review and make necessary changes to existing retention policies or create new policies. Rational retention policies created after considering legitimate business needs and infrastructure limitations are the most defensible. An example of such retention policy should include:

   Establishing an appropriate and workable retention schedule for
   paper and [ESI;] helping business units establish practice and
   customs, tailored to the needs of their business, to identify the
   business records they need to identify[;] addressing the retention
   of email and other communications, such as instant messaging
   and voicemail[;] addressing other forms of [ESI] that are created
   in the ordinary course of business[;] developing communication
   policies that establish and promote the appropriate use of
   company systems[;] and training individuals to manage and
   retain business records created or received in the ordinary
   course of business. (116)

The retention policy should also include a "legal hold" policy that would apply once the duty to preserve arises. An employee or a company that sees a lawsuit on the horizon must stop destroying potentially relevant evidence and must take affirmative steps to preserve such evidence even before a request to preserve is receive from other parties or a complaint is filed. (117) Therefore, it would also be wise to train certain employees to be aware for complaints that have the potential to lead to litigation.

The litigation hold should be designed to include all forms of ESI, and to be implemented quickly to preserve unchanged ESI. The retention policy should be in writing and circulated routinely via email or memoranda to managers and heads of departments in order to establish a "common practice." By following an objective, preexisting policy, a company can formulate a response to e-discovery request and limit the amount of data that needs to be located and searched. (118) More importantly ESI destroyed pursuant to a reasonable retention policy is more likely to withstand spoliation sanctions. (119)

Parties should also seek the help of forensic experts or e-discovery consultants. Although there are many attorneys who are technologically savvy, it is best to have a range of "e-discovery experts" available at the onset of discovery requests. The expert need not be an attorney, but should be aware of the interplay between case law, the FRCP, and other federal regulations. Hiring an expert, even when a firm has an in-house litigation support department, is good practice for a variety of reasons. First, forensic experts have the ability to make a mirror image of relevant data and preserve it intact without manipulating associated metadata, and they are better equipped to retrieve corrupted or deleted data. Second, experts have the expertise to maintain and properly document the chain of custody so that ESI can be authenticated if the data is used as evidence. Third, experts can save parties considerable cost by facilitating the collection and review process, and by programmatically limiting ESI to specific dates, custodians, and file formats. Lastly, an expert can testify in court regarding the techniques used to collect and preserve ESI, without creating a conflict of interest issue or having the party testify as its own expert. An attorney must keep in mind that ultimate responsibility for the preservation, collection and production of ESI is on counsel. Therefore, attorneys should research the expertise and reputation of potential experts or vendors in advance.

B. Have a Discovery Plan

Attorneys should have a discovery plan ready to implement as soon as litigation is anticipated or a case has been filed. An attorney should attempt to identify the claims and client personnel who may be involved in the dispute to gauge what types of ESI future discovery requests may include. At the same time an attorney should advise its client to suspend the deletion of emails, customer data, voice mails, and other potentially relevant ESI, as well as suspend the recycling of backup tapes. After identifying possibly relevant ESI and custodians, a litigation hold should be implemented. This will allow a client's information systems to resume its routine operation, but at the same time suspend deletion and begin the preservation of potentially relevant data.

A litigation hold letter with details of which aspects of the client's retention policy can resume and what data needs to be preserved should be circulated to board members, partners, management, information technology department and to the specific individuals whose data is relevant. The litigation hold letter should instruct IT or an e-discovery expert to make mirror images of all relevant network and computer hard drives and then store the images for safe keeping. An attorney will have the duty to oversee and monitor a client's compliance with preservation. (120) Therefore, regular reminders of the litigation hold should be circulated and an attorney must affirmatively confirm that a litigation hold is in place.

C. Prepare for the Rule 26(f) Meet and Confer 

The Rule 26(f) meet-and-confer conference is a party's best opportunity to control the direction and cost of discovery. Therefore, attorneys should arrive at the conference prepared to discuss a variety of issues in order to avoid potential e-discovery problems. If an attorney is not capable of discussing the technicalities of e-discovery, a liaison with such expertise should also attend the conference.

Discussing preservation issues at this stage will make it less likely that a party will be sanctioned for failure to preserve ESI. Parties should exchange lists of relevant custodians along with a description of their title and responsibilities. Parties should also be ready to supply other parties with a detailed map of client's information systems, including the nature, scope and format of the systems in use, and names of the persons responsible for implementing the client's retention policy. With knowledge of other parties' information systems a discovery request can then clearly and specifically indicate the types of ESI a party seeks. This will limit the amount of ESI a party must retrieve and review.

The attorney should present a detailed explanation of the steps taken to preserve ESI. This will put other parties on notice of the steps taken to preserve data. If initial preservation steps are unsatisfactory, an agreement should be reached detailing how each party will segregate and preserve documents. Such an agreement will also help avoid future spoliation accusations.

A timeline for the production of documents should be established. First, parties should produce all accessible relevant ESI minus any privileged or protected documents. If more data is requested, parties should try to agree on who will bear the costs of producing inaccessible ESI. It may be helpful to allow the requesting party to take a "sneak and peek" of portions of the inaccessible data to determine if relevant ESI exists. This may save parties a substantial amount of time and cost since there is always a possibility that no relevant information exists.

Parties should agree on the methods to be used for the search of relevant data. The agreement should include a list of search parameters including names, keywords, dates, and types of files that will be used to limit the amount of relevant data needed to be reviewed. Parties should discuss the format of production. Specifics should include whether production will be delivered in native file format with metadata, or in the more traditional TIFF format with bibliographic database. Parties should keep in mind that producing ESI in native file format may be less costly, but will require more time consuming privilege review as the document's metadata and any other hidden data will be available to the requesting party. Parties should discuss whether ESI that is not kept in reasonably useable format should be converted to a useable format and whether the costs can be shared.

Lastly, it is imperative that parties discuss inadvertent disclosure of privileged or protected documents. As discussed earlier, case law is not consistent and the Amendments do not address the issue. Therefore, parties should make good faith agreements to follow the claw-back protocol set out in Rule 26(b)(5) and specify that inadvertent disclosure will not waive privilege. Parties should draft specific claw-back agreements to avoid nullification by courts. (121)

D. Getting ESI in to Evidence

The distinct characteristics of electronic documents also produces evidentiary problems. Perhaps the biggest issue relates to the admissibility of ESI into evidence. After spending perhaps an extraordinary amount of time and money to find the "smoking gun" electronic document, attorneys are still left with little guidance via case law or federal rules on how to get such data admitted into evidence. (122) Magistrate Judge Paul Grimm set out some guidelines on how get ESI admitted into evidence in federal courts. In Lorraine v. Markel (123), Judge Grimm dismissed both parties' motions for summary judgment because emails submitted by the parties as evidence were not properly authenticated. (124) The court pointed out that emails and other ESI pose evidentiary issues and that "counsel must be prepared to recognize and appropriately deal with the evidentiary issues associated with the admissibility of electronically generated and stored evidence." (125) The court explained that although silent on electronic evidence, the Federal Rules of Evidence (FRE) are applicable to ESI. (126) However, because of the nature of ESI, authentication of ESI will require greater scrutiny by judges because it is often difficult to determine if the proposed ESI is the original copy, and whether the ESI has been materially modified since the beginning of discovery. (127)

The court explained that that as a starting point, attorneys should look at FRE 901(b) for examples of how to authenticate ESI. (128) FRE 901(b)(1) permits authentication by "testimony that that a matter is what it claims to be." (129) FRE 901(b)(1) would allow a court to consider the authenticity of ESI through the testimony of a person with specific knowledge of ESI proposed as evidence. (130) For example, a spreadsheet can be authenticated by a custodian testifying that he or she has personal knowledge of the process that created the record, or a printout of a webpage can be authenticated through the testimony or affidavit of the webmaster. (131) Electronically stored information may also be authenticated by comparing previously authenticated evidence that is similar to the proposed evidence. (132) "[R]ule [901(b)(3)] allows either expert opinion testimony to authenticate a questioned document by comparing it one known to be authentic, or by permitting the fact finder to do so." (133)

Markel notes that FRE 901(b)(4) is the most frequently used rule to authenticate ESI through the use of "appearance, content, substance, internal patterns, or other distinctive characteristics, taken in conjunction with circumstances." (134) Emails or instant messages, for example, may be authenticated by looking at the address of the email, the nicknames used, the content of which a person may be familiar with, or through testimony that a party spoke about the content of the communication. (135)

Another method for authentication, under Rule 901(b)(4), is the use of hash marks. A hash mark is "[a] unique numerical identifier that can be assigned to a file.... [Hash marks are] so distinctive that the chances that any two data sets [having] the same hash value, no matter how similar they appear, is less than one in a billion." (136) Hash marks are inserted into the original ESI when they are created and therefore available if needed to authenticate.

Markel also noted that the most useful authentication rule is 901(b)(9). (137) This rule permits authentication of ESI by "describing a process or system used to produce a result and showing that the process or system produces an accurate result." (138) Parties can show the accuracy of process through expert testimony.

Attorneys should be mindful of the examples provide by Markel during their pre-discovery preparation. Doing so will help avoid tainting ESI that may potentially be used as evidence in court.

V. CONCLUSION

Electronically stored information has certainly created challenges at the discovery phase of discovery. Many of the challenges faced by attorneys are created by the lack of technical knowledge associated with ESI, the "hysteria" that many vendors and consultants try to create, and the fact that the FRCP does not deal with e-discovery as adequately as it should. However, through early preparation attorneys can learn the intricacies of e-discovery and thereby control the time, costs and other issues.

(1.) The "E-discovery Amendments" include changes to FED. R. CIV. P. 16, 26, 33, 37 and 45. See generally EXCERPT OF THE REPORT OF THE ADVISORY COMMITTEE ON CIVIL RULES (E-GOVERNMENT AND E-DISCOVERY), (July 20, 2006), http://www.uscourts.gov/rules/supct1106/Excerpt_CV_EGovt.pdf.

(2.) Ronald K. Perkowski, Coping With the EDD Drumbeat, LAW.COM, Jan. 25, 2008, http ://www.law.com/jsp/legaltechnology/pubArticleLT.jsp?id= 1201169140560.

(3.) See John J. DiGiglio, Electronic Mail: From Computer to Courtroom, 35 INFO. MGMT. J. 2, 1-3 (2001); Matthew M. Neumier & Brian D. Hansen, Avoiding the Pitfalls of Electronic Discovery, 1-2 MEALEY'S LIT. REP. DISC., 1 (2003).

(4.) See Per Anderson, Thom Rubel & Melissa Webster, Adoption of Document Standards, IDC White Paper 208278, 3 (2007), http://www.openxmlcommunity.org/documents/IDC%20Document%20Adoptions %20White%20Paper.pdf. A typical corporate email user sends and receives about 110 emails per day. RADICATI GROUP, EMAIL SENT AND RECEIVED GROWTH STATISTICS, 2003-2005. (2003). Research indicates that email traffic in general has increased 80% between 2002 and 2003. Id.

(5.) THE SEDONA CONFERENCE, THE SEDONA GUIDELINES: BEST PRACTICE & COMMENTARY FOR MANAGING INFORMATION & RECORDS IN THE ELECTRONIC AGE, vi (2005) [Hereinafter SEDONA GUIDELINES 2005].

(6.) See STEVE GILHEANY, THE DECLINE OF MAGNETIC DISK STORAGE COST OVER THE NEXT 25 YEARS, 1, http://www.berghell.com/whitepapers/storage%20costs.pdf. Gilheany projects the price of one terabyte, the rough equivalent of 2,000 scanned filing cabinets, will decrease from $8,373.39 in 2000 to $70.11 in 2008. Id. A search for one terabyte hard drives on Google Products yields a range of $223.20 to $473.30. http://www.google.com/products?q=%221+terabyte%22+Hard+drive&btnG=Sear ch+Products&hl=en&show=dd&scoring=pd, last visited on January 26, 2008.

(7.) See BARBARA CHURCHHILL, THE IMPACT OF ELECTRONICALLY STORED INFORMATION ON CORPORATE LEGAL AND COMPLIANCE MANAGEMENT: AN IBM POINT OF VIEW, 3 (2006), http://tld.www-03.cacheibm.com/industries/financialservices/ doc/content/bin/fss_the_impact_of_eletronically.pdf; James Moore, E-Discovery: The Newly Amended Federal Rules of Civil Procedure, P-E MOORE's FEDERAL PRACTICE--CIVIL PART I, 2007.

(8.) Moore, supra note 7.

(9.) Id.

(10.) Marshall Brian & Tim Crosby, How E-mail Works, HowStuffWorks.com, Oct. 18, 2007, http://communication.howstuffworks.com/email.htm.

(11.) Microsoft Help and Support, How To Recover A Lost File In Word 2007 or 2003, Jan. 25, 2007, http://support.microsoft.com/kb/827099.

(12.) Scott Nagel, Embedded Information in Electronic Documents: Why Metadata Matters, July 2004, LAW PRACTICE TODAY, http://www.abanet.org/1pm/lpt/articles/ftr07044.html.

(13.) Id.

(14.) THE SEDONA CONFERENCE, THE SEDONA PRINCIPLES: BEST PRACTICES RECOMMENDATIONS & PRINCIPLES FOR ADDRESSING ELECTRONIC DOCUMENT PRODUCTION, 60 (2007) [Hereinafter NEDONA PRINCIPLES 2007].

(15.) Chad Perrin, Deleting Files Isn't Always Enough, TECHREPUBLIC, January 8, 2008, http://blogs.techrepublic.com.com/security/?P=388.

(16.) Id.

(17.) Moore, supra note 7.

(18.) FED. R. CIV. P. 34 (1970). The Advisory Committee notes state that "[t]he inclusive description of 'documents' is revised to accord with changing technology. It makes clear that Rule 34 applies to electronics data compilations from which information can be obtained...." Id.

(19.) See generally, FED. R. CIV. P. 26 (2006).

(20.) Morgan Stanley, 2005 WL 674885 (Fla. Cir. Ct., Mar. 23, 2005).

(21.) Id. at*l-9.

(22.) Id.

(23.) Landon Thomas, Jr., Jury Tallies Morgan's Total at $1.45 Billion, N.Y. TIMES, May 19, 2005, at 31, available at http://www.nytimes.com/2005/05/19/business/19perelman.html.

(24.) See generally, Morgan Stanley, supra note 20.

(25.) Id. at *2.

(26.) Moore, supra note 7.

(27.) Id.

(28.) Id.

(29.) 54 F.R.D. 220 (W.D. Va. 1972)

(30.) Id. at 221.

(31.) Id. at 221-222.

(32.) Id. at 222.

(33.) See, e.g., Nat'l Union Elec. Corp. v. Matsushita Elec. Ind. Co. Ltd., 494 F.Supp 1257, 1262 (E.D. Pa. 1980).

(34.) See Bristol-Myers Squibb Sec. Lit., 205 F.R.D. 437, 440-441 (D.N.J. 2002) (holding that requesting party must pay for electronic copies but need not pay for the creation of original electronic versions); In re Air Crash Disaster at Detroit Metropolitan Airport, 130 F.R.D. 634, 636 (E.D. Mich. 1989) (ordering responding party to produce electronic copy of a computer tape, but ordering requesting party to pay cost of creating the copy).

(35.) 183 F.R.D. 596 (N.D. Fla. 1989).

(36.) Id. at 600-601.

(37.) Id. at 598.

(38.) Id. at 601.

(39.) Id. at 601-602.

(40.) Rowe, 205 F.R.D. 421 (S.D.N.Y. 2002).

(41.) Id. at 424-425.

(42.) Id. at 425.

(43.) ADAM I. COHEN & DAVID J. LENDER, ELECTRONIC DISCOVERY: LAW AND PRACTICE, 5-23, (Aspen Publishing 2007).

(44.) Rowe, supra note 40, at 429.

(45.) Id. at 433.

(46.) Zubulake v. UBS Warburg, LLC., 217 F.R.D. 309, 322-323 (S.D.N.Y. 2003) [hereinafter Zubulake 1].

(47.) Id. at 312.

(48.) Id. at 322-323.

(49.) Id. at 321-323.

(50.) Id. at 324.

(51.) Id. at 318.

(52.) Id. at 324.

(53.) Id.

(54.) Id. at 322-323.

(55.) See, e.g., Wiginton v. CB Richard Ellis, Inc. (Wiginton II), 229 F.R.D 568, 573 (N.D. Ill. 2004) (modifying the Zubulake factors to emphasize the proportionality test of the pre-amendment FRCP Rule 26(b)(2)(iii), which, like the Rowe factors, favored shifting the cost to the plaintiff).

(56.) Ladas & Parry, L.L.P., Federal Rules to be Amended to Address Electronic Discovery, http://www.ladas.com/BULLETINS/2006/FRCPElectronicDiscovery.shtml, (last visited Jan. 5, 2008).

(57.) See note 10, supra and accompanying text.

(58.) See Computer Assoc. Int'l, Inc. v. Quest Software, Inc., 2003 WL 21277129, *1 (N.D. Ill. 2003).

(59.) Marrero, 2006 WL 1967364 (D.P.R. 2006)

(60.) Id. at *1.

(61.) Id.

(62.) Id.

(63.) Id. at *4.

(64.) Compare Crossroads Systems, Inc. v. Dot Hill Corp., 2006 WL 1544621, *3 (W.D. Tex. May 31, 2006)(holding that producing emails inadvertently was voluntary and therefore privilege was waived) and MSF Holding, Ltd. v. Fiduciary Trust Co., 2005 U.S. Dist. LEXIS 34171 (S.D.N.Y. Dec. 7, 2005)(finding that privilege emails produced inadvertently constituted waiver because they were not marked privilege) with In re Natural Gas Commodity, Lit., 229 F.R.D. 82 (S.D.N.Y. 2005)(finding no waiver of where privileged emails were inadvertently produced despite two rounds of review) and Chrysler Corp. v. Sheridan, 2001 WL 773099 (Mich. App. July 10, 2001)(stating that inadvertent disclosure of privileged emails does not constitute waiver).

(65.) COHEN & LENDER, supra note 43, at 7-21.

(66.) Stevenson v. Union Pac. R.R. Co., 354 F.3d 739, 751 (8th Cir. 2004). See e.g., McGuire v. Acufex Microsugical, Inc., 175 F.R.D. 149 (D. Mass. 1997) (recognizing that the duty to preserve ESI can arise prior to the filing of a complaint against a party, based on other pending litigation against the party); Broccoli v. Echostar Commc'n. Corp., 229 F.R.D. 506 (D. Md. 2005) (holding that defendant had a duty to preserve relevant ESI, based on pre-litigation communications in which plaintiff complained about sexual harassment); Trigon Ins. Co. v. U.S., 204 F.R.D. 277 (E.D. Va. 2001) (finding that "if a party has notice (by discovery request, by the provisions of a rule regarding disclosure, or otherwise)..., that party is under a duty not to take actions that would result in the destruction of [electronic data]").

(67.) COMMITTEE ON RULES OF PRACTICE AND PROCEDURE, EXCERPT FROM THE REPORT OF THE JUDICIAL CONFERENCE, 13 (Sept. 2005), http://www.uscourts.gov/rules/supct1105/Excerpt_STReport_CV.pdf.

(68.) COHEN & LENDER, supra note 43 at 3-30.

(69.) Morgan Stanley, supra note 20 at *6.

(70.) Id. at 4.

(71.) Thomas, supra note 23.

(72.) 93 Eng. Rep. 664 (K.B. 1722).

(73.) MARGARET M. KOESEL & TRACY L. TURNBULL, SPOLIATION OF EVIDENCE: SANCTIONS FOR DESTRUCTION OF EVIDENCE IN CIVIL LITIGATION ix (Daniel F. Gourash ed., American Bar Association) (2006).

(74.) Id.

(75.) Id.

(76.) Zubulake v. UBS Warburg, LLC, 220 F.R.D. 212, 220 (S.D.N.Y 2003) ("Zubulake IV").

(77.) COHEN & LENDER, supra note 43 at 3-48-3-49.

(78.) Zubulake v. UBS Warburg, 229 F.R.D. 422, 431, (S.D.N.Y. 2004) ("Zubulake V").

(79.) ADVISORY COMMITTEE ON THE FEDERAL RULES OF CIVIL PROCEDURE, REPORT OF THE CIVIL RULES ADVISORY COMMITTEE, 20-72 (2006), available at http://www.supremecourtus.gov/orders/courtorders/frcr06p.pdf. [Hereinafter ADVISORY COMMITTEE REPORT].

(80.) See United States Supreme Court Order on Rules of Civil Procedure, April 12, 2006, available at http://www.supremecourtus.gov/orders/courtorders/frcr06p.pdf.

(81.) ADVISORY COMMITTEE REPORT, supra note 79, at 21.

(82.) ADVISORY COMMITTEE ON THE FEDERAL RULES OF CIVIL PROCEDURE, EXCERPT FROM THE REPORT OF THE JUDICIAL CONFERENCE, 5-6, (September, 2004), available at http://www.uscourts.gov/rules/supct1105/Excerpt_STReport_CV.pdf

(83.) Brad Benz, E-Discovery Amendments to the Federal Rules of Civil Procedure Go Into Effect Today, ELECTRONIC DISCOVERY LAW, Dec. 1, 2006, http://www.ediscoverylaw.com/2006/12/articles/news-updates/ediscovery -amendments-to-the-federal-rules-of-civil-procedure-go-into-effect-today/.

(84.) FED. R. CIV. P. Rule 26(a).

(85.) FED. R. CIV. P. 34(a)(1). But "[ESI can] include email, web pages, word processing files, audio and video files, images, computer databases--virtually anything stored on a computing device--including but not limited to servers, desktops, laptops, cell phones, hard drives, flash disks, personal digital assistants and MP3 players." SEDONA PRINCIPLES 2007, supra note 14, at 1.

(86.) Columbia Pictures, 245 F.R.D. 443 (C.D. Cal. 2007).

(87.) "RAM is used to hold programs while they are being executed, and data while it is being processed. RAM is also volatile, meaning that information written to RAM will disappear when the computer's power is turned off." RedHat, Glossary, http://www.redhat.com/docs/manuals/linux/RHL_6.2_Manual/getting. started-guide/ch-glossary.html, (last visited Jan. 15, 2008).

(88.) Columbia Pictures, supra note 86, at 447 (citing RAM definition found in Random House dictionary and as defined by National Communications System).

(89.) FED. R. CIV. P. 34(a)(1)(A).

(90.) See e.g., Apple Computer, Inc. v. Franklin Computer Corp., 545 F.Supp. 812, 813 (E.D. Pa. 1982) (explaining information stored in RAM is temporary); James Boyle, Intellectual Property Policy Online: A Young Person's Guide, 10 HARV. J. L. & TECH. 47, 90 (1996) (explaining how RAM data is overwritten); supra note 87 and accompanying text.

(91.) FED. R. CIV. P. 26(f).

(92.) Id.

(93.) FED. R. CIV. P. 16(b)(5). The Advisory Committee notes accompanying Rule 16 state that "It]he amendment to Rule 16(b) is designed to alert the court to the possible need to address the handling of discovery of electronically stored information early in the litigation if such discovery is expected to occur." Id.

(94.) FED. R. CIV. P. 34(b).

(95.) Id.

(96.) FED. R. CIV. P. 26(b)(2)(B).

(97.) Id.

(98.) Id.

(99.) Id.

(100.) FED. R. CIV. P. 26(b)(2)(C)(i).

(101.) Id. at 26(b)(2)(C)(ii).

(102.) Id. at 26(b)(2)(C)(iii).

(103.) FED. R. CIV. P. 26(b)(5)(B).

(104.) Id.

(105.) Id.

(106.) Committee on Rules of Practice and Procedure Judicial Conference of the United State, Proposed New Evidence Rule 502, (September 2007) available at http://www.uscourts.gov/rules/newrules6.btm#proposed0806.

(107.) Id.

(108.) Id.

(109.) Id.

(110.) FED. R. CIV. P. 37(f).

(111.) Id.

(112.) FED. R. CIV. P. 37 and accompanying Advisory Committee Notes.

(113.) Id.

(114.) Id.

(115.) See Zubulake V, supra note 78, at 432 (stating that an attorney has an affirmative duty to understand its clients systems.) "A 'document retention policy' is generally understood to mean a set of guidelines or rules governing storage and destruction of paper [and electronic] records." COHEN & LENDER, supra note 43, at 4-4.

(116.) SEDONA PRINCIPLES 2007, supra note 14, at 13.

(117.) Zubulake V, supra note 78, at 431-435.

(118.) COHEN & LENDER, supra note 43 at 4-4.

(119.) See Arthur Anderson LLP v. U.S., 544 U.S. 696, 704 (2005) ("'Document retention policies,' which are created in part to keep certain information from getting in the hands of others ... are common in business.... It is, of course, not wrong for a manager to instruct his employees to comply with a valid document retention policy under ordinary circumstances.")

(120.) Zubulake V, supra note 78, at 432.

(121.) In re '318 Patent Infringement Lit., Case No. 05-356 (D. Del. Mar. 1, 2007) (holding that the general description of a claw-back agreement was insufficient to avoid waiver of privilege data after it was inadvertently produced).

(122.) Lorraine v. Markel, 241 F.R.D. 534, 537-538 (D. Md. 2007).

(123.) Id.

(124.) Id. at 537.

(125.) Id.

(126.) Id. at 538.

(127.) Lorraine v. Markel, supra note 122 at 542-543

(128.) Id. at 544-545. FED. R. EVID. 901(b) states:

(b) Illustrations. By way of illustration only, and not by way of limitation, the following are examples of authentication or identification conforming with the requirements of this rule:

(1) Testimony of witness with knowledge. ... (2) Nonexpert opinion on handwriting. ... 3) Comparison by trier or expert witness. ... (4) Distinctive characteristics and the like. ... (5) Voice identification. ... (6) Telephone conversations. ... (7) Public records or reports. ... (8) Ancient documents or data compilation. ... (9) Process or system. ... (10) Methods provided by statute or rule.

FED. R. EVID. 901(b)

(129.) FED. R. EVID. 901(b)(3)) Advisory Committee notes.

(130.) Lorraine v. Markel, supra note 122 at 545-546.

(131.) Id. at 545.

(132.) Id.

(133.) Id. at 546.

(134.) Id. (quoting FED. R. EVID. 901(b)(4)).

(135.) Id. at 546-547.

(136.) Federal Judicial Center, Managing Discovery of Electronic Information: A Pocket Guide for Judges, Federal Judicial Center, 24 (2007).

(137.) Lorraine v. Markel, supra note 122 at 549.

(138.) FED. R. EVID. 901(b)(9).

Damian Vargas, J.D. Candidate, May 2009, Rutgers University School of Law-Newark; B.A. Political Science, Hunter College, CUNY. The author dedicates this note to his parents, Bertila and Abel Vargas, and his sister, Maty, who without their continuing love and support law school would not have been possible. He would also like to thank his better half, Glenda Tulcan for her love and especially her patience. Finally, a special thank you to my close friends from FDR, Murrow, and especially the 230 Crew, for always having my back.